CBRE Flash Call: Relaunch Toolkit for Restaurants & Bars

April 30, 2020

CBRE Restaurant practice leaders, Streetsense consumer experience experts, and leading restaurant operators came together for a discussion about the opportunities and challenges facing restaurateurs as they prepare to reopen and rethink operations to accommodate COVID-19 considerations.

Flash Call Summary

The Paycheck Protection Program (PPP) allows businesses to apply for a loan amount up to 2.5X typical monthly payroll; 75% of the money must be used for payroll purposes, and the remaining 25% of capital can be used for other approved fixed costs, including rent. Current PPP guidelines require that employers rehire employees within eight weeks of receiving funds in order to receive loan forgiveness. This is difficult for restaurants to do in states that have not yet reopened, and supplemental unemployment benefits have added to the challenge of rehiring, as some employees decline rehire because unemployment pays more than what they would make working in a restaurant.

Restaurants have responded quickly and made a number of adjustments to adapt to the current situation, including setting up online ordering platforms, reducing the number of menu items to increase efficiency for takeout and delivery, and enhancing safety and sanitation measures.

When dining rooms reopen, most full-service restaurants will return to focusing on the customers that come to dine within those four walls. Meal delivery could continue to be an additional profit center for some restaurants, especially fast-casual concepts, but ghost kitchens and cloud kitchens will be the primary disruptor and make up the majority of the meal delivery business.

Consumer confidence is key to any reopening strategy, and restaurants should plan to go above and beyond existing guidelines to ensure that both staff and guests feel comfortable and confident that appropriate safety, health and hygiene measures are in place. Understanding the logistics involved with these increased measures is also critical, including protocols around wearing masks, taking the temperature of guests and employees, and sending guests or employees home if they show signs of illness.

Disruptions are occurring in both the grocery store and food service supply chains, with restaurants experiencing interruptions as various suppliers including farmers, co-packing producers and commercial fisheries deal with operational challenges.

The construction supply chain is also experiencing disruptions, and current projects underway are operating at 50% efficiency on average. Restaurants should anticipate additional time required to restart a project or kick off a new program, as it will take longer to requalify contractors who in turn must reactivate labor that may currently be furloughed. Items shipped from states where manufacturing is deemed nonessential are also causing delays.

Restaurants should plan for two categories of projects: short-term projects that address what it will take to reopen, including sanitation measures, PPE supplies, FF&E modifications and HVAC recalibration; and long-term projects that address the measures and protocols that “stick” with customers in the new environment, as well as any new regulations that may be enacted.

In China, restaurants began to reopen in mid-March. Safety measures are in place, including physical and social distancing, reducing seating capacity by up to 50%, PPE for employees and temperature checks before starting a shift. From an operational standpoint, we are seeing reduced operating hours, with increased dining during the day as workers return to the CBDs and light traffic during the evenings. As a result, some restaurants are open for full service during the day and revert to delivery/takeaway or close in the evenings. Restaurant performance is at 30-70% of pre-COVID traffic and sales. Casual dining has bounced back faster, while fine dining and banquets are experiencing a much softer recovery.

Reopenings are happening throughout Europe, with restrictions beginning to ease as of this week. Similar to China, additional safety measures are in place, and many restaurants have reduced menu items.

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Streetsense Restaurant Toolkit

CBRE joint-venture partner Streetsense brought their retail + restaurant experts together to create a Relaunch Toolkit for Restaurants + Bars. This comprehensive guide includes actionable steps and resources for restaurants.